May 18, 2010
Demand for Higher Risk Boosts Equities
U.S. equity markets are called higher this morning in follow-through buying following Monday’s strong finish. Stocks were under pressure at the mid-session yesterday but
mounted a strong short-covering rally into the close. The turnaround to the upside in the Euro was the catalyst behind the rally. The June E-mini NASDAQ managed to close higher with the Dow and
S&P 500 trailing closely.
Pressure has been on the equity markets lately because of investor concerns about weakness in the Euro Zone and the possible negative effects it may have on future
corporate profits. Early in the session on Monday, the June E-mini S&P 500 tested a key 50% level at 1115.50. This price remains important support followed by 1101.50. Although downside momentum
took the market through this price level, the mid-session recovery after the test of this price helped trigger a short-covering rally into the close.
Based on the June E-mini short-term swing of 1174.75 to 1112.75, traders should look for a retracement to 1143.75 …
